01/17/2017

Tyler Cowen has recently authored an article considering the implications of William F. Buckley’s famous quip that he would rather be governed by the first two-thousand people in the Boston telephone directory than by the two-thousand people on the faculty of Harvard University. In that article, “Sometimes the people need to call the experts”, Mr. Cowen argues that there are some aspects of government in which we should prefer the first two-thousand people in a phone-book and other aspects in which we should prefer Harvard University.

Sola dosis facit venenum, only the dose makes the poison. Mr Cowen is right in arguing that technocracy and popular politics aren’t all-or-nothing affairs, but aspects of politics that must be matched to the problem at hand. However, Mr. Cowen’s framing of the issue obfuscates many of what I believe to be the most salient aspects of the problem at hand. The world is shaking from a populist insurgency and I don’t think a good way of framing the issues involved is a thought-experiment of fine-tuning government between some happy medium between the binary of technocracy and populism.

I found the most incisive part of the article was when Mr. Cowen argued:

when it comes to the nuts and bolts of governance, typically I would prefer to be ruled by the Harvard faculty, even recognizing the biases of experts. They understand the importance of applying expertise to complex problems, and they realize many issues do not respond well to common-sense fixes. The citizenry usually cannot make good decisions, or for that matter expert appointments, when technocracy is required.

To begin with, there is the real-world competency angle. For any expertise that is traded for money on the free market, there is a feedback mechanism that ensures that consumers actually value the expertise being offered. That feedback mechanism is the market process. An exert, say a dentist or a mechanic, can only maintain his business if he proves that his expertise maps to real-world competency. No real-world competency, no customers. Profit and loss provides a feedback mechanism that, by and large, ensure that the expertise being offered on a market maps to competency at doing the tasks.

Mr. Cowen seems to trust in an invisible hand working in academia to select the best experts. I am not nearly so trusting Academia certainly does select for very smart people who are able to frame problems as clever models and who are then able to solve those models. (This mode of thinking has even infected philosophy with all of its trolley-cart thought-experiments.) However, what is the guarantee that such talent will map onto real-world competencies? Does being able to solve for a general equilibrium model necessarily bring one enlightenment about the nature of the economy? Probably to some degree, but how much is that degree? I am very doubtful of the mapping of academic success onto real-world competency.

To begin with, there is the real-world competency angle. For any expertise that is traded for money on the free market, there is a feedback mechanism that ensures that consumers actually value the expertise being offered. That feedback mechanism is the market process. An exert, say a dentist or a mechanic, can only maintain his business if he proves that his expertise maps to real-world competency. No real-world competency, no customers. Profit and loss provides a feedback mechanism that, by and large, ensure that the expertise being offered on a market maps to competency at doing the tasks.

Mr. Cowen seems to trust in an invisible hand working in academia to select the best experts. I am not nearly so trusting Academia certainly does select for very smart people who are able to frame problems as clever models and who are then able to solve those models. (This mode of thinking has even infected philosophy with all of its trolley-cart thought-experiments.) However, what is the guarantee that such talent will map onto real-world competencies? Does being able to solve for a general equilibrium model necessarily bring one enlightenment about the nature of the economy? Probably to some degree, but how much is that degree? I am very doubtful of the mapping of academic success onto real-world competency.

However, the problem is not just that I’m doubtful. I might be wrong, after all. The problem is that there are no impartial feedback mechanisms for selecting out the best expertise, or to even ensure that the so-called ‘expertise’ is competent at its real-world task. The praise of other Harvard PhDs does not strike me as an impartial feedback mechanism.

Along these lines, I think that Mr. Cowen articulates his argument through the old-fashioned lens of “who should rules?” Instead, I think that we should articulate our thoughts about populism and technocracy in institutional terms that pays attention to the fragility of the system in question to bad rulers. In The Open Society and Its Enemies, Karl Popper notably argue along these lines when he wrote that we should “replace the question: Who should rule? By the new question: How can we so organize political institutions that bad or incompetent rulers can be prevented from doing too much damage?” (p.121) In “Of the independency of Parliament,” David Hume suggested a maxim when considering political questions: “ that, in contriving any system or government, and fixing the several checks and controuls of the constitution, every man ought to be supposed a knave.”

Popper and Hume wanted us to think about the robustness of institutions to their rulers and therefore to their experts. I’d like to go further: I’d like to consider whether institutions can be antifragile to bad experts, that is can the variation introduced by bad experts actually improve a society? I do think that is a possibility. What we need is a more decentralized system that allows for more experiments in technocracy and allows for unsuccessful experiments to actually fail. That way, the real-world competency of technocrats can be proven in the field, so to speak, in a way that provides social evolution with the chance to select for the best experts.

So yes, I do agree with Mr. Cowen that maybe we need to call the experts. However, I think that the institutions surrounding technical expertise in government today have fragilized society. Experiments in government requires a more antifragile system, a system that is benefited, not harmed, by variation.

President Donald Trump’s administration will certainly be a brave experiment in government. The tragedy will be that the United States is so centralized that if President Trump fails, so too will the entire nation. The nation is too sensitive to variation in those that rule it. What is needed is a nation in which President Trump’s administration can fail without being the apocalypse predicted. That requires more freedom, more subsidiarity, and, ultimately, a more antifragile society. ‘Freedom’ here doesn’t merely mean the freedom to succeed. It also means the freedom to fail, and for your ideas to go extinct with your failure.

Framing the issue as one of technocracy versus populism attracts attention away from the institutional question we should be asking: How do the institutions select the experts? No one should reasonably be denying that expertise is necessary in running a successful administration. However, we should be doubting whether the experts we currently have have enough real-world competence to actually do so. And we should also be thinking about whether the institutions those experts inhabit are too fragile.

08/27/2013

Over the past 13,000 years the
predominant trend in human society has been the replacement of
smaller, less complex units by larger, more complex ones.

-Jared Diamond, Guns, Germs, and
Steel

Even since Edward Gibbon's The
Decline and Fall of the Roman Empire (an
probably even before that) the death throes and final end of the
Roman state have been an obsession of thinkers of all persuasions and
perspectives. Ever since Gibbon's magnum opus hit the market, new
theories explaining the Roman Empire's collapse and theories
explaining why the contemporary world resembles that trajectory of
events have been widespread. Today isnodifferent.

What is the cause,
though, of this Roman fixation? Why have scholars and commentators
always found the need to find either explanations or inspiration from
these events? This is clearly something to ponder about since there
are certainly many other historical episodes of interest.

To
pick other examples from ancient well removed from any modern
loyalties, the history of the Diadochi in the Near East following
Alexander the Great's amazing feat of conquest certainly has both
drama and political lessons as does the collapse of the Roman empire.
Not only do the Diadochi inherit the aftermath of one of the largest
swings in power seen in history, but they also rule during one of the
most culturally creative stretches of human history, when Alexander's
empire served as a κρατήρ
for all of the political channels it opened for the spread of
culture across the remnants of Alexander's empire.
So for that matter does the history of the Delian League, which one
could easily imagine a commentator using in order to shed light on
NATO and the expression of American power across the world. Yet
neither of those have gathered either the academic or public interest
as the fall of Rome has had; indeed, nowhere near as much.

Why Rome, then?
There is certainly the point that all of European history has been
shaped by Rome's end, but hasn't it also been affected by the
Diadochi and the Delian League? Certainly, but neither or those two
have left such a mark on European law, language, and architecture as
Rome had. With Rome and her culture having such an impact upon the
evolution of our own, it is thus of no surprise that our imagination
focuses on Rome so much.

Another factor is
that is the Fall of Rome is a clear and distinct counterexample
against what has seemed to be the trend of human history towards ever
more complexity. Unlike the quarreling Diadochi and the relatively
short-lived Delian League, the Roman Empire was a stable order for
well over two centuries. This history of stability lends to its
ultimate collapse a much more shocking and apocalyptic elements to it
that arouses the imagination like almost no event before or since.
The image of Alaric's sack of Rome in 410 B.C., or Genseric's sack in
455, almost immediately leads to the question of how could the
Visigoths manage to overwhelm such a powerful state. The Roman Empire
actually maintained order, and continued to increase the complexity
of that order, within its borders. It projected power from Scotland
to the Zagros Mountains, and managed to have smooth transitions
between generations of decision-makers that maintained that order for
so long. And yet, that order was torn asunder by the end, not to be
followed by more complex social networks, but less as much of Westerm
Europe was divided into fiefdoms by the victorious Germanic tribes.

There are two
general patterns within the world that make the case of Rome so
interesting, and these are patterns we are often only half conscious
of pulling our interest. First is something that was mentioned above:
the general trend in human history, whether it is in the form of
Manifest Destiny or the development of linguistic states out of Romantic
nationalism, in societies becoming both larger in terms of
population, and more complex in their organization. Second is the
Lindy effect, which is that anything that can replicate itself within
the world becomes more likely to replicate itself over time as it
exists each unit of time further.

The first shocks us because out of the dust of the Western Roman Empire
came a handful of Germanic kingdoms, none of which, not even
Charlemagne’s, could claim to have the complexity of the Roman
Empire. Complexity was there, and then it vanished for centuries. A
clear explicandum for explanation and food for thought. The second
shocks us because the Roman Empire survived for so long as a stable political order only not to seemingly into something else, something distinctly Roman, but it collapsed into a political order, at least in the West, that was clearly not Roman.

One
could almost be forgiven to think that human history is a history of
the emergence of ever-more complex institutions and modes of social
cooperation. Human events have seem to have an autocatalytic property
to themselves by which the association of human beings, especially
within competitive relationships, is sufficient to bring about an
avalanche of creativity generating ever larger institutions with ever
more interactions within them. Bands have yielded to tribes, tribes
to chiefdoms, chiefdoms to simple states, and simple states to more
complex ones. It seems the natural order of things that human
societies increase in complexity as time passes.

Against
this, the history of Rome provides us with a spectator's perspective,
sometimes impartial sometimes nakedly biased, on the unraveling of a
society far more complex than any of its succeeding orders for
centuries. That lack of complexity across the Middle Ages is really
one of the reasons it is called the Dark Ages, and why the Middle
Ages seem to lack the glory that Rome had. The often petty squabbling
between and within dynasties over tracks of land that were small
potatoes compared to the territorial stakes of the Roman Empire just
doesn't seem like a proper act to follow the Roman hegemony. This is
all on top of the destructive fantasies that the Fall of Rome
satisfies within us.

08/24/2013

The contrivances of nature surpass the contrivances of art, in the complexity, subtlety, and curiosity of the mechanism; and still more, if possible, do they go beyond them in number and variety; yet in a multitude of cases, are not less evidently mechanical, not less evidently contrivances, not less evidently accommodated to their end, or suited to their office than are the most perfect production of human ingenuity.

-William Paley

What is a complex system? Perhaps that question is best answered from perspective of a via negativa. Latin for “the negative route,” via negativa going about the analysis of an object or a phenomenon by thinking about what it is not, not what it is. Rather than thinking about the sine qua non of a complex system, the via negative way is to think about what a negative system is not, coming to an understanding of its essence by eventually recognizing the dividing line demarcating that which is a complex system from that which is.

The most striking example of something that is not a complex system is a machine like a watch. Immanuel Kant uses this example as a simple system, though he does not use that language, when he is analyzing the traits of what he calls “self-organized beings” or “natural ends” in his Critique of the Power of Judgment (a lengthy discourse, but one well deserving to be quoted in full):

In a watch one part is the instrument for the motion of another, but one wheel is not the efficient cause for the production of the other: one part is certainly present for the sake of the other but not because of it. Hence the producing cause of the watch and its form is not contained in the nature (of this matter), but outside of it, in a being that can act in accordance with an idea of a whole that is possible through its causality. Thus one wheel in the watch does not produce the other, and even less does one watch produce another, using for that purposes other matter (organizing it); hence it also cannot by itself replace parts that have been taken from it, or make good defects in its original construction by the addition of other parts, or somehow repair itself when it has fallen into disorder: all of which, by contract, we can expect from organized nature. – An organized being is thus not a mere machine, for that has only a motive power, while the organized being possesses in itself a formative power… (Critique of the Power of Judgment, 5:374)

In this surprisingly insightful piece for a philosopher unaware of the modern investigations into the nature of order in the world (though Immanuel Kant is rarely ever not insightful), Kant identifies the dividing line between natural ends, or in our contemporary lingo complex orders, as the capability of an object to form itself.

One of the most key attributes to a complex order that Kant recognizes within the quote is that a complex order has its own sources of causation within it which it can use in order to maintain and further advance the order, to “make good defects in its original construction” and to “somehow repair itself.” The watch could not be a natural end since the watch has no means of creating itself and it thus, as Kant's contemporary William Paley so famously harped on, requires an external artisan to provide it with its organization. On the contrary, a natural end is able to bring about its own possibility from within, a Kant noted earlier in his third Critique:

For a body, therefore, which is to be judged as a natural end in itself and in accordance with its internal possibility, it is required that its parts reciprocally produce each other, as far as both their form and their combination is concerned, and thus produce a whole out of their own causality, the concept of which, conversely, is in turn the cause (in a being that would possess the causality according to concepts appropriate for such a product) of it in accordance with a principle; consequently the connection of efficient causes could at the same time be judged as an effect through final causes. (Critique of Practical Reason, 5:373)

In more concise language, a natural end could bring about causal power from within itself in order to ensure its own being. For the sake of a definite example, an animal, as a natural end, is able to use its jaws in order to secure the nutrition it needs in order to maintain its existence within the world.

The concepts that matter most here are that of entropy and order. Entropy is a measure of the disorder of a system based on the number of ways that a system can be arranged. More technically, it can be understood as the number of microstates within a macrostate, but intuitively it is how smashed a porcelain teacup. That teacup's organization requires that the matter constituting it have a certain form, and that form is the order that restrains the number of microstates that can be counted within a macrostate inhabited by that teacup; that is, until someone in passionate anger throws the poor cup against the wall, greatly increasing the number of microstates that it can contain.

Returning to Kant's example, a watch, once smashed upon the ground, has absolutely not capability of reforming itself. There is simply not causal power from within the watch, as a physical system, in order to ensure its own orderliness, and this is one of the sine qua non defining a simple system. A simple system is organization with no means of restoring its own order. Once entropy has its way with it, the watch simply goes derelict. Contrast this with a biological organism, surely an example of a complex system. If an organism is hurt and its order disrupted (which is really what all injuries are: disruptions to the body’s somatic order), it has the capability of causing the restoration of that order through bodily processes that being hurt triggers.

Unlike the simple machines, a complex order is not helpless among the storms of the Heraclitean flux of time; rather, complex orders can adapt to change and fight against it, however futile that fight may eventually be in the long run. Memento mori, death is the ultimate conquest of the body’s complex system by disorder, and it is coming for every such order in the world.

05/28/2013

“The opening up of new markets,
foreign or domestic, and the organizational development from the
craft shop and factory to such concerns as U. S.
Steel illustrate the same process of industrial mutation-if I
may use that biological term-that incessantly revolutionizes the
economic structure from within, incessantly destroying the old
one, incessantly creating a new one. This process of Creative
Destruction is the essential fact about capitalism. “

- Joeseph Schumpeter

Πἁντα
ῥεῖ. Even though we have no record of Heraclitus ever
saying that, πἁντα ῥεῖ
- everything flows – has become the maxim of his philosophy - a
philosophy in which we can never step in the same river twice or
where justice is strife. Even rejecting everything else Heraclitus
said, he was able to put into proper perspective something that must
always be on our mind when thinking about, well, anything: Everything
changes with time, and the passage of time brings along with it
change that, poetically indulging in Heraclitus' concept of the unit
of opposites, is the great creator and destroyer of all. In order to
study complex systems like the economy over time, then we must take
into account how they are able to cope with change over time and how
by this process they are able to show design-like characteristics. To
do this, we cannot rely on self-organization alone, but we must have
recourse to the concept of selection

Self-organization is not
a sufficient explanatory explaining the harmonization and
coordination of complex systems with a changing world. Even if
self-organized entities, whether it be cells or firms, can come into
existence without selective pressures, they are surrounded and must
survive within a changing world. In order to fine-tune those entities
to the stresses and difficulties of survival. Selective forces are
needed in order to adapt the entities that have self-organized to
their environment, and to ensure that the population is dominated by
that which can thrive, rather than that which is doomed. Yes, complex
structures may very well be able to emerge without a designer via
self-organization, like molecular self-assembly, but
self-organization does not explain why populations are able to
survive over time.

This is especially true
for complex systems like the economy that are under the constant
tyranny of Heraclitean flux. In biological evolution, the selection
process operates very slowly, the holistic character of an organisms
adaptations, and the conditions of the environmental ecology that
determines the selective pressures upon organisms are relatively
constant. Living fossils do exist. The fishes of the order
Coelanacath, which had reached its current form just about four
hundred millions years ago, which were thought to have gone extinct
by biologists since the Late Cretaceous period just about sixty six
millions years ago until a specimen was found off the South African
coast in 1938.

In The Origins of
Order, Stuart A. Kauffman argues
that the existence of these living fossils like the order Coelanacath
is a strong piece of historical evidence that once species gain their
form via self-ordering phenomena, that selection cannot do much to
alter the self-ordered forms of species, that order exists despite
selection not because of it.
However, within the market-economy, evolution proceeds at a much more
rapid pace with much more demanding selective pressures than for
biological evolution. The demands of profit-maximization do not treat
living fossils within the economy very well, and even those business
practices that date over a century have had to continuously adapt
their practices to the demands of the world. As a result, Kauffman's
argument that selection cannot do much to upset the form of complex
evolutionary wholes is much less persuasive because it requires a
relatively constant ecology and a slow pace of selection.

Limiting ourselves here
to the social domain of evolution, if self-organization is the only
means for the emergence of order, then the self-ordering entities
must be able to deal with the problems that will bring and therefore
they must be very robust against change. Important to recognize here
is that all self-ordered creations must have non-anticipative
strategies against the random shocks that time will bring. As a
result, the only means by which a complex system can adapt to random
changes is by the selection of those self-ordered objects that have
“chosen,” a word that is often still must be used metaphorically
since even objects self-ordered by a human mind cannot be designed in
anticipation of all relevant future problems, After all, without
specifying a selective pressure at work, there is no means by which
entities that have self-organized will be able to survive over time.
There is simply no way of speaking about self-organization and the
survival of what has self-organized without invoking the concept of
selection over time.

Once self-organized
entities come into existence in society and time passes, bringing
change along with it, some of those entities will continue to exist
while some will dissolve into the dust. Even though change comes and
goes, the complex systems that are human societies have generally
endured. Moreover, they have generally thrived. This is especially
true for market-economies. With that come questions about the
adjustment of markets and how the overall health of the market is
able to thrive even though so many of the smaller pieces that make up
the market will ultimately fail. Markets do not do not adapt to
change simply by the existence of self-organized entities like firms
and stock markets. They adapt to change by the success of those most
able to foresee future conditions and the failure of those incapable
of foreseeing future conditions. Profit reigns supreme and, as Ludwig
von Mises pointed out in Human
Action,
the source of all profit is the prediction, by accident or design,
“the future constellation of demand and supply.”
After all, it is through the competitive process that the firms, to
take one example of a self-organized entity in society, most capable
of maximizing their profits and thriving through time survive while
those firms that are not able to are destroyed. Again, we see that in
order to explain complex systems through time, we need to recourse to
an explanation that has selection over time baked into it, and which
helps make it fuller.

Nassim Nicholas Taleb
has illumined the process by which complex systems adapt to change in
his book Antifragile by
arguing that a complex system can only benefit when its consituent
parts are able to fail. What he calls the “antifragile” are those
things in the world that benefit from variability, like how bones can
grow stronger when physically conditioned, and the “fragile” that
which does not benefit from variability like a porcelain tea cup,
easily broken by the slightest. Taleb argues that a complex system
can only benefit from variation if the individual components of that
system are themselves fragile, and can be dissolved by change leaving
only that which has lasted through the change. Returning to the
example of the last paragraph, the health of the markets and their
overall antifragility is only made possible by the fragility of
individual entrepreneurs. Taleb himself recognized this and
recommended in Antifragility that
there be a “National Entrepreneur Day” to commemorate the legion
sacrifices made by fragile entrepreneurs in order to secure the
greater good of an antifragile economy

Like
nature, the markets are red in tooth and claw. That which cannot
anticipate the future conditions of supply and demand bites the dust
while that which can remains and perhaps even prospers. Even though
the fragile within the system may be destroyed, the system is
benefited by the shocks brought about by variability since the shock
has eliminated features within the system that could not stand the
flux of change. Of course, no system is infinitely antifragile, so to
speak. After all, a large enough shock will be able to completely
eliminate a complex system in fell swoop, like an asteroid leading to
world-wide, mass extinction, so it would be more sound to say that
complex systems are antifragile up to a point.
Nevertheless, their antifragility highlights that we cannot explain
the adaptation of complex systems like the economy merely with the
concept of self-organization; instead, what is needed is a theory
that can explain the selective mechanisms by which those systems
change. And how they change is by change in the frequency of their
constituent parts, whether they are self-organized or not.

In
the end, self-organization simply cannot be an adequate explanation
for the adaptive nature of complex social systems since it cannot
take into account the change that is brought upon such systems by the
passage of time. We need selection over time for that. Only with the
concepts of variation, replication, and selection can we provide an
adequate explanation of how complex systems can more than simply
endure through time, but can adapt to the environment that they are
within.